Kinnaird College for Women Lahore

Investment & Portfolio Management

Pre-mid assignment 1: Islamic Mutual Fund

Submitted to: Ma’am Farah Amir

Submitted by: Noor Amjad

Major: Accounting & Finance

Date: 19 September 2018

 Mutual Fund: Dawood Islamic Fund

Fund Manager Report – October 2017

Summarize its various types and performance investing and also show its %
of increase in specific investing aspects.

Following are the types in which Dawood Islamic Fund is investing:

 TFC / Sukuk
 Equity Securities
 Bank Balances
 Others

Now coming towards the performance investing, Net Assets of Dawood Islamic Fund in October
2017 are PKR 95.39 M. while the Net Asset value per unit is PKR 116.6868. To evaluate net asset
value per unit we should firstly know what net asset value means? It is the value per share of a
mutual fund or an exchange-traded fund (ETF) on a specific date or time. With both security
types, the per-share dollar amount of the fund is based on the total value of all the securities in its
portfolio, any liabilities the fund has and the number of fund shares outstanding.

How Net Asset Value (NAV) is calculated

It’s calculated through the following formula:

NAV = (assets - liabilities) / number of outstanding shares

Assets include total market value of the fund's investments (priced using the closing price of all
the assets on the day the NAV is calculated), cash and cash equivalents, receivables and accrued
income. Liabilities equal total short-term and long-term liabilities, plus all accrued expenses,
such as staff salaries, utilities and other operational expenses.

In Dawood Islamic Fund the NAV is PKR 116.6868. DIFs have provided monthly return
(5.33%) for the month ended October 31, 2017 as compared to its benchmark return of (2.70%)
during the same period. While it has provided the final year monthly return (19.01%) with the
benchmark return of (5.57%). As it is clearly shown that the monthly return is less in October
2017 as compare to the 2016. In October 2017 it gets smaller, which mean DIFs will make more
money. If it widens the effect will be reversed. Investment trusts argue that any movement in the
discount should be dwarfed by the performance of its assets over the long term. Moreover A
Company which is expected to perform well would have a share price higher than its NAV per
share. A struggling firm will trade at a discount to NAV; meaning shareholders are pessimistic
about the future and have started to sell.

Lastly the % of increase in investing aspects is

In October 2017 the TFC / Sukuk were 8.69% while in September 2017 they were reduced to
8.13% A. while the equity securities in October 2017 were 45.05% as compare to 49.63% in
September 2017. Moreover the bank balances were 37.53% in October n 32.59% in September
and graded as AA+ and others were 8.73% in October while they were 9.655 in September.

Summarize key discussion points from the “Stock Market Review", and
"Bond Market Review" from report

As we can see from the equity/ securities the common n preferred stock of Dawood Islamic Fund
are more in September (49.63%) than in October (45.05%). The equities are more than the bonds
of the funds. The top debt securities are TPL Trakker Ltd. Sukuk 5.24% Fatima Fertilizer
Company Ltd. Sukuk 3.45%. These are invested in sukuk bonds. Sukuk represents undivided
shares in the ownership of tangible assets relating to particular projects or special investment
activity. Dawood Islamic Fund has a common share in the ownership of the assets linked to the
investment although this does not represent a debt owed to the issuer of the bond. They
Consequently, are entitled to a share in the revenues generated by the Sukuk assets. The sale of
sukuk relates to the sale of a proportionate share in the assets
An analysis of past performance of the fund since its inception, also include a
graphical presentation of fund performance.

From the above graphical representation we can conclude that the TFC/Sukuk were more in
October 2017 (8.69%) than in September 2017 (8.13%). Sukuk represents ownership of an asset
or its usufruct. The claim embodied in sukuk is not simply a claim to cash flow but an ownership
claim. This also differentiates sukuk from conventional bonds as the latter proceed over interest
bearing securities, whereas sukuk are basically investment certificates consisting of ownership
claims in a pool of assets.

After Sukuk the Equity/Securities in October 2017 were less than in September 2017. As in
October the percentage was 45.05% as compare to 49.63%. Investing in equity securities also
grants the investor various rights to participate in the running of the company and may possibly
generate regular income in the form of dividends.

Bank balances were 37.53% in October 2017 as compare to 32.59% in September 2017. There is
a slight increase in the bank balances which is good for the company as well as the performance.

Lastly others were increased from 8.73% in October to 9.65% in September which is also a good
sign.